Declining price of vegetables in India pulled down inflation to over three-year low of 5.96 per cent in March, which may prompt the Reserve Bank of India (RBI) to consider a rate cut in its annual monetary policy next month.
Inflation based on the Wholesale Price Index (WPI) stood at 6.84 per cent in February and was 7.69 per cent in March 2012.
According to the official data released on Monday, inflation in the manufactured items category witnessed a marginal decline at 4.07 per cent in March. It was 4.51 per cent in February.
Inflation in food articles category, which has a 14.34 per cent share in the WPI basket, too declined to 8.73 per cent. Inflation in this category was at 11.38 per cent in February.
The easing in food inflation was helped by a sharp drop in prices of vegetables. Inflation in vegetables stood (-)0.95 per cent in March, from 12.11 per cent in the previous month.
The rate of price rise in onion stood at 94.85 per cent for the month of March, against the inflation rate of 154.33 per cent in February. Inflation in rice eased to 17.90 per cent in March, against 18.84 per cent in the previous month.
The 5.96 per cent March-end inflation is much lower than RBI's projection of 6.8 per cent.
The decline in inflation and a slowdown in industrial output growth to 0.6 per cent in February has raised expectations of a rate cut from the central bank when it next meets to review the monetary policy on May 3.
Inflation for January was revised upwards to 7.31 per cent, from 6.62 per cent as per provisional estimates.
With inputs from PTI